The World Is Flat (27 page)

It is this triple convergence-of new players, on a new playing field, developing new processes and habits for horizontal collaboration—that I believe is the most important force shaping global economics and politics in the early twenty-first century. Giving so many people access to all these tools of collaboration, along with the ability through search engines and the Web to access billions of pages of raw information, ensures that the next generation of innovations will come from all over Planet Flat. The scale of the global community that is soon going to be able to participate in all sorts of discovery and innovation is something the world has simply never seen before.

Throughout the Cold War there were just three major trading blocs-North America, Western Europe, and Japan plus East Asia-and the competition among the three was relatively controlled, since they were all Cold War allies on the same side of the great global divide. There were also still a lot of walls around for labor and industries to hide behind. The wage rates in these three trading blocs were roughly the same, the workforces roughly the same size, and the education levels roughly equivalent. “You had a gentlemanly competition,” noted Intel's Chairman Craig Barrett.

Then along came the triple convergence. The Berlin Wall came down, the Berlin mall opened up, and suddenly some 3 billion people who had been behind walls walked onto the flattened global piazza.

Here's what happened in round numbers: According to a November 2004 study by Harvard University economist Richard B. Freeman, in 1985 “the global economic world” comprised North America, Western Europe, Japan, as well as chunks of Latin America, Africa, and the countries of East Asia. The total population of this global economic world, taking part in international trade and commerce, said Freeman, was about 2.5 billion people.

By 2000, as a result of the collapse of communism in the Soviet Empire, India's turn from autarky, China's shift to market capitalism, and population growth all over, the global economic world expanded to encompass 6 billion people.

As a result of this widening, another roughly 1.5 billion new workers entered the global economic labor force, Freeman said, which is almost exactly double the number we would have had in 2000 had China, India, and the Soviet Empire not joined.

True, maybe only 10 percent of this new 1.5 billion-strong workforce entering the global economy have the education and connectivity to collaborate and compete at a meaningful level. But that is still 150 million people, roughly the size of the entire U.S. workforce. Said Barrett, “You don't bring three billion people into the world economy overnight without huge consequences, especially from three societies [like India, China, and Russia] with rich educational heritages.”

That is exactly right. And a lot of those new workers are not just walking onto the playing field. No, this is no slow-motion triple convergence. They are jogging and even sprinting there. Because once the world has been flattened and the new forms of collaboration made available to more and more people, the winners will be those who learn the habits, processes, and skills most quickly-and there is simply nothing that guarantees it will be Americans or Western Europeans permanently leading the way. And be advised, these new players are stepping onto the playing field legacy free, meaning that many of them were so far behind they can leap right into the new technologies without having to worry about all the sunken costs of old systems. It means that they can move very fast to adopt new, state-of-the-art technologies, which is why there are already more cell phones in use in China today than there are people in the United States. Many Chinese just skipped over the landline phase. South Koreans put Americans to shame in terms of Internet usage and broadband penetration.

We tend to think of global trade and economics as something driven by the IMF, the G-8, the World Bank, the WTO, and the trade treaties forged by trade ministers. I don't want to suggest that these governmental agencies are irrelevant. They are not. But they are going to become less important. In the future globalization is going to be increasingly driven by the individuals who understand the flat world, adapt themselves quickly to its processes and technologies, and start to march forward-without any treaties or advice from the IMF. They will be every color of the rainbow and from every corner of the world.

The global economy from here forward will be shaped less by the ponderous deliberations of finance ministers and more by the spontaneous explosion of energy from the zippies. Yes, Americans grew up with the hippes in the 1960s. Thanks to the high-tech revolution, many of us became yuppies in the 1980s. Well, now let me introduce the zippies.

“The Zippies Are Here,” declared the Indian weekly magazine Outlook. Zippies are the huge cohort of Indian youth who are the first to come of age since India shifted away from socialism and dived headfirst into global trade and the information revolution by turning itself into the world's service center. Outlook called India's zippies “Liberalization's Children” and defined a zippie as a “young city or suburban resident, between 15 and 25 years of age, with a zip in the stride. Belongs to Generation Z. Can be male or female, studying or working. Oozes attitude, ambition and aspiration. Cool, confident and creative. Seeks challenges, loves risks and shuns fear.” Indian zippies feel no guilt about making money or spending it. They are, says one Indian analyst quoted by Outlook, “destination driven, not destiny driven, outward looking, not inward, upwardly mobile, not stuck-in-my-station-in-life.” With 54 percent of India under the age of twenty-five-that's 555 million people-six out of ten Indian households have at least one potential zippie. And the zippies don't just have a pent-up demand for good jobs; they want the good life.

It all happened so fast. P. V. Kannan, the CEO and cofounder of the Indian call-center company 24/7 Customer, told me that in the last decade, he went from sweating out whether he would ever get a chance to work in America to becoming one of the leading figures in the outsourcing of services from America to the rest of the world.

“I will never forget when I applied for a visa to come to the United States,” Kannan recalled. “It was March 1991.1 had gotten a B.A. in chartered accountancy from the [Indian] Institute of Chartered Accountants. I was twenty-three, and my girlfriend was twenty-five. She was also a chartered accountant. I had graduated at age twenty and had been working for the Tata Consultancy group. So was my girlfriend. And we both got job offers through a body shop [a recruiting firm specializing in importing Indian talent for companies in America] to work as programmers for IBM. So we went to the U.S. consulate in Bombay. The recruiting service was based in Bombay. In those days, there was always a very long line to get visas to the United States, and there were people who would actually sleep in the line and hold places and you could go buy their place for 20 rupees. But we went by ourselves and stood in line and we finally got in to see the man who did the interview. He was an American [consular official]. His job was to ask questions and try to figure out whether we were going to do the work and then come back to India or try to stay in America. They judge by some secret formula. We used to call it 'the lottery'-you went and stood in line and it was a life lottery, because everything was dependent on it.”

There were actually books and seminars in India devoted entirely to the subject of how to prepare for a work visa interview at the U.S. embassy. It was the only way for skilled Indian engineers really to exploit their talent. “I remember one tip was to always go professionally dressed,” said Kannan, “so [my girlfriend and I] were both in our best clothes. After the interview is over, the man doesn't tell you anything. You had to wait until the evening to know the results. But meanwhile, the whole day was hell. To distract our minds, we just walked the streets of Bombay and went shopping. We would go back and forth, 'What if I get in and you don't? What if you get in and I don't?' I can't tell you how anxious we were, because so much was riding on it. It was torture. So in the evening we go back and both of us got visas, but I got a five-year multiple entry and my girlfriend got a six-month visa. She was crying. She did not understand what it meant. 'I can only stay for six months?' I tried to explain to her that you just need to get in and then everything can be worked out.”

While many Indians still want to come to America to work and study, thanks to the triple convergence many of them can now compete at the highest levels, and be decently paid, by staying at home. In a flat world, you can innovate without having to emigrate. Said Kannan, “My daughter will never have to sweat that out.” In a flat world, he explained, “there is no one visa officer who can keep you out of the system... It's a plug-and-play world.”

One of the most dynamic pluggers and players I met in India was Rajesh Rao, founder and CEO of Dhruva Interactive, a small Indian game company based in Bangalore. If I could offer you one person who embodies the triple convergence, it is Rajesh. He and his firm show us what happens when an Indian zippie plugs into the ten flatteners.

Dhruva is located in a converted house on a quiet street in a residential neighborhood of Bangalore. When I stopped in for a visit, I found two floors of Indian game designers and artists, trained in computer graphics, working on PCs, drawing various games and animated characters for American and European clients. The artists and designers were listening to music on headphones as they worked. Occasionally, they took a break by playing a group computer game, in which all the designers could try to chase and kill one another at once on their computer screens. Dhruva has already produced some very innovative games- from a computer tennis game you can play on the screen of your cell phone to a computer pool game you can play on your PC or laptop. In 2004, it bought the rights to use Charlie Chaplin's image for mobile computer games. That's right-a start-up Indian game company today owns the Chaplin image for use in mobile computer games.

In Bangalore and in later e-mail conversations, I asked Rajesh, who is in his early thirties, to walk me through how he became a player in the global game business from Bangalore.

“The first defining moment for me dates back to the early nineties,” said Rajesh, a smallish, mustachioed figure with the ambition of a heavyweight boxer. “Having lived and worked in Europe, as a student, I was clear in my choice that I would not leave India. I wanted to do my thing from India, do something that would be globally respected and something that would make a difference in India. I started my company in Bangalore as a one-man operation on March 15, 1995. My father gave me the seed money for the bank loan that bought me a computer and a 14.4 kbp modem. I set out to do multimedia applications aimed at the education and industry sectors. By 1997, we were a five-man team. We had done some pathbreaking work in our chosen field, but we realized that this was not challenging us enough. End of Dhruva 1.0.

“In March 1997, we partnered with Intel and began the process of reinventing ourselves into a gaming company. By mid-1998, we were showing global players what we were capable of by way of both designing games and developing the outsourced portions of games designed by others. On November 26, 1998, we signed our first major game development project with Infogrames Entertainment, a French gaming company. In hindsight, I think the deal we landed was due to the pragmatism of one man in Infogrames more than anything else. We did a great job on the game, but it was never published. It was a big blow for us, but the quality of our work spoke for itself, so we survived. The most important lesson we learned: We could do it, but we had to get smart. Going for all or nothing-that is, signing up to make only a full game or nothing at all-was not sustainable. We had to look at positioning ourselves differently. End of Dhruva 2.0.”

This led to the start of Dhruva's 3.0 era-positioning Dhruva as a provider of game development services. The computer game business is already enormous, every year grossing more revenue than Hollywood, and it already had some tradition of outsourcing game characters to countries like Canada and Australia. “In March 2001, we sent out our new game demo, Saloon, to the world,” said Rajesh. “The theme was the American Wild Wild West, and the setting was a saloon in a small town after business hours, with the barman cleaning up... None of us had ever seen a real saloon before, but we researched the look and feel [of a saloon] using the Internet and Google. The choice of the theme was deliberate. We wanted potential clients in the U.S.A. and Europe to be convinced that Indians can 'get it.' The demo was a hit, it landed us a bunch of outsourced business, and we have been a successful company ever since.”

Could he have done this a decade earlier, before the world got so flat?

“Never,” said Rajesh. Several things had to come together. The first was to have enough installed bandwidth so he could e-mail game content and instructions back and forth between his own company and his American clients. The second factor, said Rajesh, was the spread of PCs for use in both business and at home, with people getting very comfortable using them in a variety of tasks. “PCs are everywhere,” he said. “The penetration is relatively decent even in India today.”

The third factor, though, was the emergence of the work flow software and Internet applications that made it possible for a Dhruva to go into business as a minimultinational from day one: Word, Outlook, NetMeeting, 3D Studio MAX. But Google is the key. “It's fantastic,” said Rajesh. “One of the things that's always an issue for our clients from the West is, 'Will you Indians be able to understand the subtle nuances of Western content?' Now, to a large extent, it was a very valid question. But the Internet has helped us to be able to aggregate different kinds of content at the touch of a button, and today if someone asks you to make something that looks like Tom and Jerry, you just say 'Google Tom & Jerry' and you've got tons and tons of pictures and information and reviews and write-ups about Tom and Jerry, which you can read and simulate.”